The federal governmentCanadian governmentHarper regime Harper government’s effort to give Bay Street a single national regulator had a minor setback yesterday, as an Alberta court of appeal ruled that Ottawa cannot create a body to govern something that, according to the Constitution, falls under provincial jurisdiction. This isn’t decisive—the big test is before the Supreme Court, whose hearings are supposed to start next month—but the Supremes have said they’ll be paying close attention to what the provincial courts in Alberta and Quebec say.

“The Supreme Court will make up its own mind, and this doesn’t bind them,” said Toronto securities lawyer Philip Anisman, who headed a committee in the late 1970s that recommended creating a national securities regulator in Canada. “They frequently reverse courts of appeal.”

But the Alberta government said the decision offers strong support for its position before the Supreme Court.

“It certainly bolsters our case going forward to the Supreme Court, because the Supreme Court will have to refer to the Alberta Court of Appeal ruling,” Finance Department spokesman Bart Johnson said.

The ruling [PDF link] basically says that the feds cannot create a national regulator—even though it would cover “interprovincial and international trade”—because it would infringe on the province’s rights to regulate “property and civil matters.” (Brush up on the Constitution, and imagine some Schoolhouse Rock–style animations, here.)

This is probably good news for Alberta and Quebec, as it’s exactly the argument they’ve made in the past. The government, however, argues that the Supreme Court has already upheld all sorts of federal swimming in provincial waters on issues like the environment, health care and pensions. In all this, we need to remember that Ottawa’s plan so far is to have an opt-in system—everything except the criminal penalties in Ottawa’s plan would be things the provinces could opt out of.

This doesn’t seem to have shaken up Bay Street at all. Everyone seems to understand that, in this case, the only votes that count are in Ottawa.